7.

b.

c.

9.

a.

b.

c.

(Common stock valuation) Dalton Inc. has a retum on equity of 13.6 percent and retains 53 percent of its eamings for reinvestment purposes. It recently paid a dividend of $3.75 and the stock is currently selling for $39. a. What is the growth rate for Dalton Inc.? b. What is the expected return for Dalton's stock? c. If you require a 13 percent return, should you invest in the firm? a. What is the growth rate for Dalton Inc.? 7.2% (Round to two decimal places.) b. What is the expected return for Dalton's stock? % (Round to two decimal places.) (Common stock valuation) The common stock of NCP paid $1.32 in dividends last year. Dividends are expected to grow at an annual rate of 8 percent for an indefinite number of years. a. If NCP's current market price is $23.50 per share, what is the stock's expected rate of return? b. If your required rate of return is 10.5 percent, what is the value of the stock for you? c. Should you make the investment? a. If NCP's current market price is $23.50 per share, the stock's expected rate of return is \%. (Round to two decimal places.)